Petroleum Legislation and Regulations

7. Considerations for new producers

New producer countries such as Mozambique, Ghana, South Africa, Tanzania, Uganda and Kenya can experience particular problems with an evolving petroleum legal framework. Their legislation needs to take the “resource curse” into consideration and carefully plan to avoid it, via linkages to other critical economic sectors. For instance, Nigeria and Ghana have given high priority to this aspect. In principle, this ought to be easier for new and emerging producers as they can learn from the experience of established producers such as Nigeria and Angola, which are considered to have made mistakes in this respect.

Resource nationalism is another element that shapes the making of petroleum legislation in most producing countries. However, the local communities are increasingly aware of their rights to benefit from their resources and tend to push some governments to adopt more strict regulations – on local content in particular.

Another challenge is to understand and act on the importance of environmental legislation – especially the environmental impact assessment requirements (EIAs). A draft EIA should be made available to the public before a project can go ahead. Regulations should make this obligatory. Harmonisation of regional standards, policies, legal framework and regulations, the promotion of cross-border public-private partnerships and collaborative sustainability efforts are thus important components of petroleum law and policy.

As the discovery and commercial development of new sources becomes increasingly challenging, the right balance of biodiversity, environment, health and safety also needs to be made: for instance, exploration in lakes puts biodiversity at risk and requires vigorous social-economic and environmental planning.

Finally, investors entering a new market have a strong interest in assisting governments in designing the best policy and regulatory framework for the country concerned.

A long-term, sustainable legal framework will provide investor security but also increase the likelihood that benefits will accrue to the country’s citizens.